The effect of this Order is to prohibit resale price maintenance by a supplier in relation to hand knitting yarns. We had a number of these Orders before us since the setting up of the Fair Trade Commission under the restrictive Trade Practices Act, 1953, and I think I am right in saying that on all occasions these Orders have gone through without very much comment. In view of the fact that at the time when this Act was introduced there was much opposition from large sections of the business community and, of course, on the other hand, some elements in the business community called for action about what are called restrictive trade practices, I thought it well to find out from those in the trade concerned with this matter how they felt the Act had been working in the intervening 11 years and what were their opinions on it.
I thought that this was a matter not only of general interest and of interest to the business people concerned but of interest to Senators and members of the Dáil, because I noticed that when this matter came up in the Dáil it got very cursory treatment. That was, I think, because there are so many matters coming up in the Dáil that there is not somebody there to deal with every Bill that comes up, especially as they come up so often and in such numbers.
When the Act was introduced certain elements were opposed to anything being done in this matter, and they gave reasons which I do not propose to quote now. At the same time, there was a general belief in the trade in the idea of price maintenance. The system had worked pretty well for a great number of years and, in fact, right up to that time. Undoubtedly, there were certain flaws in the system and certain injustices and, perhaps, a certain amount of restrictive practice, but, on the whole, it was felt by many people in trade that the price maintenance system had a lot to be said for it. It was believed that it was a good thing not only for the merchant himself but for the customer as well. It assured the merchant a fair and, generally speaking, not exorbitant working profit, as can be seen from the figures quoted in the Minister's opening statement, because those margins, as quoted, are considerably lower than those prevailing in other countries for similar commodities, as can be found by examination; and for the customer there was an assurance of both the quality of the article and of service.
There was a lot of opposition to the Act, but, on the other hand, it is fair to say that the Act was brought into being by a call from other elements in the business community, as can also be seen from the Minister's statement where it is stated that in the inquiry for this particular Order the manufacturers as a whole and also the wholesalers seemed to be in favour of price maintenance. Generally speaking, it seems that most retailers were in favour of the abolition of price maintenance.
I am not going to make any case against this particular Order, but I have asked the Dublin Chamber of Commerce in a very telegraphic form for the points they have found in their experience of the past 11 years. I propose to quote very briefly what the Chamber have told me:
Against the action of the Fair Trade Commission and against the abolition of the system of price maintenance it is stated that in those distributive trades where price cutting exists a law of the jungle seems to apply. If price maintenance were observed a semblance of order, which is considered desirable, would exist.
It has been the experience in some cases that price cutters do not provide the customer with any accommodation in the field of after sales service.
That is a point which is often made in the motor trade.
Another point against is:
It can also be said that some of the premises from which price cutters carry on their business do not in any way measure up to providing a standard for the customer or proper facilities for their staffs.
In those distributing houses which are operating a price cutting system frequently the labour employed is not of a very high standard, again resulting in poor service for the customer.
In favour of the system of price maintenance it says:
That the Commission served a very useful purpose in getting rid of the system of "closed" lists with which distributors had to comply in supplying goods. As a result of the closed lists which existed before the Commission was appointed some distributors could not open new accounts.
That the Commission itself in making an enquiry into a particular trade causes a lot of inconvenience and embarrassment to that trade but that in the long run the findings of the Commission appear to be in the interests of the community in general.
That it would appear to be very fair for the small trader but not so fair for the larger trader.
That the activities of the Commission at times seem to be to interfere unduly in trade practices.
So much for what I got from the Chamber of Commerce. It is not always remembered on this point of making goods available to anybody who can afford to buy them that the realities of their standing must be considered, perhaps their irresponsibility or the standing of their business operations—their ability to pay does not come into it because they must be able to pay. Under the present system now and under the particular Order, people must be served with goods and, sometimes a very great hardship can be inflicted by unfair abuse of the privileges afforded of free access to suppliers.
In this context I should like to quote a case in point from the January number of the Irish Hardware and Allied Trader. It will be a very short quotation from the leading article:
The liquidation of Thomas Henshaw and Company as we go to Press this month comes as a shock to the entire trade. It is the third major liquidation in the hardware trade in Dublin in 18 months.
Blame for the failure of this firm and any resulting unemployment must be laid upon the Fair Trade Commission. It was the longstanding policy of the Commission which encouraged Henshaws and their voluntary chain group, FAIR to sell goods at less than cost prices, and after this had begun the Commission was quick to reprimand manufacturers (including some outside this State) who had withheld their goods from the company for that reason, and to stand in the way of those who would protect the firm from the consequences of its own folly.
But Henshaws apparently, and quite understandably, believed that they could bully manufacturers into conforming to the firm's price policy by the threat of invoking the big stick of the Fair Trade Commission should they refuse supplies and thus eliminate all competition.
Finally it says:
Distributors find it difficult to understand why that body has ignored its duty to provide adequate safeguards against extreme price competition, the whole purpose of which is to eliminate trade competitors by unfair means.
The Commission was set up with an obligation to deal with the problem of unjust competition. Until its £3,100-a-year members come to admit that unjust competition includes more than resale price maintenance, that body will continue to work against the interests of the State. And in a time when co-operation between the various sections of the community is required as never before, it will continue to set one section against another. Under such an unfair anti-trader policy, Henshaws will not be the last failure in our trade.
The point is referred to in another quotation which I shall make later.
Fair trading is not only fair trading in the interest of the consumer—and sometimes the misconceived interests of the consumer because quality and service enter into the question. Fair trading must be more than fair trading one way; it must be fair trading both ways. It must be fair trading with regard to one's competitors. If a firm has access to a market and to wholesalers and even if, knowing that it is going into liquidation, it sells goods below cost price, that aspect of the matter should surely attract the attention of the Commission. It is felt in trade circles generally that the question is one-sided because of this particular matter. I should like to quote further. The Minister might have something to tell us because this refers to a memorandum sent to the Minister by the Federation of Trade Associations on December 31st.
It accused him of allowing the Commission to take much too narrow a view of their responsibilities in that regard. The abolition of price maintenance and the giving of free access to overcrowded trades were not the sole purposes for which that body was set up. Guiding principles to assist it in regulating unfair trade practices had also been established.
In the Schedule to the Act, unfair trade practice had been defined as "a practice which had or is likely to have the effect of unjustly eliminating a trade competitor," and distributors, therefore, found it hard to understand why the Commission had so far ignored their duty to provide adequate safeguards against extreme price competition as an unfair practice.
For my own part I should like to say that there has been a considerable change in the philosophy of retailing since this Fair Trade Commission was established in 1953. I myself at that time subscribed to the system of price maintenance as it was operating at that time, but methods have changed very much since and there is a case for more free trading of the kind allowed and provided for in this Order. There are exceptions and I would make this exception: it is too broadly worded. In mass-produced goods there is no case for price maintenance especially now with the large markets and large groups of markets created by multiple stores. It is both impracticable and undesirable that there should be any question of price maintenance regarding mass-produced goods.
In the case of specially goods which have to be so expensively advertised and certain kinds of luxury goods, there is no case for price maintenance. Not only the question of price maintenance but the supplier having to supply under the law should not apply to such things as cosmetics. In the case of cosmetics the condition of the article which the customer purchases in the shop is of great importance. In the case of cream, if every chemist or shopkeeper in the country were allowed to be supplied from the cosmetic suppliers it would be found that most of the stuff would be dangerous to use. It might be a long time in stock and might have deteriorated and become full of bacteria. In that particular instance I had a case where people in the country wrote to me to see if I could get agencies for these well-known makes and the answer I got was that they could not supply these people because of risk of deterioration in their stocks which would do very great harm to the customers here.
